Intel Corporation (INTC)
Q1 2010 Earnings Call Transcript
April 13, 2010 5:30 p.m. ET

Executives

Kevin Sellers - Vice President, Investor Relations
Paul S. Otellini - President and Chief Executive Officer
Stacy J. Smith - Vice President and Chief Financial Officer

Analysts

John Pitzer - Credit Suisse
Glen Yeung - Citigroup
Christopher Danley - JP Morgan
Tim Luke - Barclays Capital
Kevin Cassidy - Thomas Weisel Partners
Hans Mosesmann - Raymond James
Mark Lipacis - Morgan Stanley
James Covello - Goldman Sachs
Patrick Wang - Wedbush Morgan Securities, Inc.
Uche Orji - UBS
Stacy Rasgon - Sanford C. Bernstein & Co. LLC
David Wong - Wells Fargo Securities , Llc
Ross Seymore - Deutsche Bank Securities
Sumit Dhanda - Banc of America/Merrill Lynch
Doug Freedman - Broadpoint American Technology Research
Mahesh Sanganeria - RBC Capital Markets

Presentation

Kevin Sellers

Thanks. Sounds like we had background information hope – a background noise, hopefully that was taken care of. Thank you, Shana, Welcome everyone to Intel’s first quarter 2010 earnings conference call. I’m here with Paul Otellini, our President and CEO; and Stacy Smith, our Chief Financial Officer.

A few important items before we begin. First, we’ve posted our earnings release, CFO commentary and updated financial statements to our investor website, intc.com, for anyone who still needs access to that information.

Also if during this call we use any non-GAAP financial measures or references, we will post the appropriate GAAP financial reconciliations to our website as well. Following brief prepared remarks from both Paul and Stacy, we’ll be happy to take questions.

As we begin let me remind everyone that today’s discussion contains forward-looking statements based on the environment as we currently see it and as such, does include risks and uncertainties. Please refer to our press release for more information on the specific risk factors that could cause actual results to differ materially.

One final note, we’ve scheduled our annual Investor Day on May 11th at the Intel headquarters here in Santa Clara. We look forward to seeing many of you here. If any of you need additional information about that event, please contact Intel Investor Relations directly.

So with that let me now hand it over to Paul.

Paul S. Otellini

Thanks, Kevin. A year ago at this time, the industry was in the midst of a sharp correction with many expecting it to continue for an extended period but we saw signals of it bottoming then and now a year later the industry is nearly fully recovered.

At Intel, we focused on expanding our Nehalem architecture, getting our 32-nanometer process technology ready and designing alternatives and derivatives of our new Atom processor for many new market segments.

As a result of that focus, we’ve started this year with the best product lineup we’ve ever had with leadership in all segments and categories. Demand for these new products has been incredible and as a result, Intel achieved a record first quarter in revenue and in operating income. It was notable this quarter that demand for our higher end PC products was particularly strong, which helped improve margins and profitability.

Our mobile business set a new revenue record, as demand for notebooks continues to be excellent. We’re also seeing signs of corporate demand returning, which we believe will continue to improve, given the age of the corporate PC fleet and the compelling ROI that our new generation of servers presents.

Looking at the supply chain, we continue to see aggregate inventories operating within normal healthy ranges. Intel’s own inventory remains lean. OEM inventories are flat quarter-on-quarter and downstream channel inventories are also within normal ranges. We watch inventory levels and sell-through activity very carefully and we remain comfortable with the supply chain conditions.

In our manufacturing environment, our factory teams have executed the ramp of our 32-nanometer process superbly. We exceeded output expectations with lower costs than originally anticipated and are currently shipping over 50 SKUs on 32-nanometers.